Mark Randall - Disruptive Influencehttp://www.markrandall.com
Sun, 01 Mar 2015 03:12:29 +0000en-UShourly1http://wordpress.org/?v=4.3.15The dress is blue and black but the photo of the dress is not.http://www.markrandall.com/the-dress-is-blue-and-black-but-the-photo-of-the-dress-is-not/
http://www.markrandall.com/the-dress-is-blue-and-black-but-the-photo-of-the-dress-is-not/#commentsSun, 01 Mar 2015 00:33:29 +0000http://www.markrandall.com/?p=3110[...]]]>I don’t care what color the dress is. Instead, let’s focus on the three questions around this Internet tempest in a teapot that actually are intriguing.

What caused the camera take such a weirdly inaccurate photo?

Why is the human perceptual system causing this image to be perceived differently by some people?

Was one side’s perception of the color more ‘correct’ than the others (spoiler: Yes, and I’ll prove it).

By way of full disclosure, I mostly see the dress as goldish tan and very light blue. However, I am ambi-dress-trous. With some effort, I can force myself to see it as blue/black as well. Below, I’ll show you how you may be able to trick your brain into the seeing it the other way too. First, a few facts.

Secondary photos show that the physical dress is, in reality, blue/black. However, this proves nothing about what the original inaccurate photo of the dress shows. A photo of the dress is not the dress, so knowing the true color of the dress doesn’t change what the original untrue photo shows.

The color cues in the photo are unintentionally deceptive. How your visual system interprets these cues leads to the difference in perception of colors.

The Photoshop color picker demonstrates that the original, inaccurate photo shows the dress colors to be a very light bluish hue and a goldish brown which fades to tan.

This brings us to the first question: what caused the camera to take a this photo with inaccurate colors?

1. Why the camera screwed up the photo

When a camera takes a photo it tries to determine the correct white balance for the scene. In other words, it has to decide what is true white. It also has to decide what is true black in the photo. To do this the camera scans the image and looks for the whitest white and the blackest black and adjusts the rest of the colors accordingly. This is called “White Balancing.” It usually works quite well but we’ve all seen it fail occasionally in photos when skin tones look blue.

So what caused the camera’s color interpretation error in the original photo? I don’t think it’s a white balance error, I think it’s an exposure error. Why? Because there are three white reference sources in the image and the camera kept them all white.

1. At the top right of the image, behind the dress, is what appears to be daylight coming from a window. We can tell it’s daylight because of the blue halo glow around the top right of the image. That’s called chromatic aberration and it often comes from daylight, so it’s proper to infer we’re seeing through a window to outdoors.

2. Closer to the camera is what appears to be a store display cabinet with internal lighting.

3. The store’s interior ceiling lights which are illuminating the white-to-beige gradient on the floor. These appear to be halogen lights, due to the slightly warmer hue of the light.

http://www.markrandall.com/the-dress-is-blue-and-black-but-the-photo-of-the-dress-is-not/feed/1Bad Audio is Deadhttp://www.markrandall.com/bad-audio-is-dead/
http://www.markrandall.com/bad-audio-is-dead/#commentsMon, 03 Nov 2014 09:22:00 +0000http://www.markrandall.com/?p=3099[...]]]>She looked up at me, smiled and shrugged, as if to say “Yeah, so?”

I’d just asked my five year old daughter to take a listen to some new speakers I’d installed. It was a 2.1 stereo system with subwoofer and integrated amplifier, all for less than $80 delivered. The reviews on Amazon offered a lot of praise about the sound quality despite the low price. Once hooked up I was surprised how good they sounded on a reference audio source. Especially for their diminutive size and low price. At that moment my daughter had bounced into the room and I wanted to share the experience of being so pleasantly surprised by a new product. And that was where things went off the rails.

As the impressive sound flowed around us and she stared blankly back at me, I realized “She doesn’t even know what bad audio sounds like. To her, great sounding audio is just audio.” Kids under a certain age simply don’t experience crappy sound often, or perhaps at all. To them, audio reproduction is either ‘great’ or ‘broken’, there is no middle-ground of ‘everyday bad sound’. When I was a teenager, bad audio was pretty much the expected default. Most places we went generally had lousy audio, except perhaps a concert, a theater or an audiophile’s house. The bad sound wasn’t just from terrible speaker design, it was also from substandard materials, poor placement and abysmal audio sources. Whether it was the snap, crackle, pop of an LP on my dad’s $500 turntable, the smeary, muddled sonic mess created by an audio cassette, or the incessant background hum on my cousin’s vintage dashboard 8 track player, it just sounded bad. But it was the kind of bad we were used to.

I did a quick mental rundown of the persistent audio sources in my daughter’s life. She watches a little bit of TV in the living room which has a 5.1 Dolby Digital sound system. Our home theater has a THX certified 7.1 system. The sound systems in our cars are standard manufacturer equipment, which these days sound quite good. She even has a pair of Bose noise cancelling headphones for her iPad. The sources feeding into these systems are all at least 44.1 Khz, 16-bit digital recordings compressed with recent generation codecs. Kids these days simply have no experience with how bad a fuzzily modulated sound source over-driving cheap speakers can sound. Yes, I just said “Kids these days” but I’m not devolving into a rant of “In MY day we used to have to…” It’s actually a nice reminder just how far the march of progress has carried us in an area we don’t think about as much as ‘modern wonders’ like computers and mobile phones.

Even setting aside the impact of digitization of sound sources, over the past couple decades the typical quality of sound reproduction per dollar has scaled up dramatically. Although sound design used to be largely a black art, the knowledge of how to engineer low-cost speakers and amplifiers at high quality has become ubiquitous. The cost of components and materials has fallen to the point that even ‘cheap’ gear sounds remarkably good and ‘cost effective’ gear can sound amazing. There’s little additional value in paying top dollar for audiophile-grade equipment. The improvement over well-chosen mainstream gear is negligible. Audio purists used to pay $1,000 and up per speaker. Today, entire 7.1 speaker systems with outstanding quality cost less than $1,000 total. And that’s pretty awesome.

]]>http://www.markrandall.com/bad-audio-is-dead/feed/0Brandinghttp://www.markrandall.com/branding/
http://www.markrandall.com/branding/#commentsFri, 08 Aug 2014 22:59:54 +0000http://www.markrandall.com/?p=3096I was thinking about branding and had a realization. Good brands tell you who they are, great brands tell you who you are.
]]>http://www.markrandall.com/branding/feed/1Is Your New Idea a Feature, a Product or a Business?http://www.markrandall.com/is-your-new-idea-a-feature-a-product-or-a-business/
http://www.markrandall.com/is-your-new-idea-a-feature-a-product-or-a-business/#commentsMon, 27 Jan 2014 19:12:16 +0000http://www.markrandall.com/?p=3085[...]]]>When I talk to young entrepreneurs I’m always impressed by the enthusiasm and passion they have for their new business ideas. While I want them to be excited, I also want them to succeed in the long-term. Unfortunately, excitement doesn’t always map to success. There are two questions that should be asked of any idea before an entrepreneur unleashes their enthusiasm. First, “Can this idea disrupt the status quo?” If it’s not going to disrupt someone’s existing business, the idea may not be valuable enough to drive a successful new business.

The second question is “Will this be a feature, a product or a business?” This is about defining scope. Many interesting ideas are really new features for existing products. The risk is whether these features generate enough value to differentiate an entire product. When considered in isolation, these cool features can appear monumental. However, when seen from the context of busy customers who are difficult to reach and resistant to changing what works, it’s clear the value on offer must reach epic proportions. It’s better to focus on an entire new product experience.

Many new products replicate some existing product functionality but the most successful products redefine the overall experience to such an extent they create a new category. Yet, even this is not always enough. If this new product is successful, are there adjacent problems and customers to drive a string of hit products? One successful product can be the basis of a new venture but successful entrepreneurs think about building businesses not just products.

You said something that touches on a struggle I’ve had my whole life. I’m hoping you could offer some advice.

The gist was “There’s nothing more dangerous than an entrepreneur with just one idea.” I’ve got the opposite problem entirely. I have real difficulty not working on an idea, and I latch on to a lot of ideas at once. The result is pretty predictable – if I was doing this on a workbench, there would be a dozen things that are about 1/3rd built.

I know intellectually that it doesn’t work that way – that seeing things through is the important bit, that keeping focused is key if you want to build success, and that you aren’t doing wrong by your ideas by not spending energy there – that you take focus from one idea in service of another. I think I get it, in my brain at least.

But I’m lousy at putting that into practice. It’s really easy for a novel idea to catch my passions and I have a really hard time putting that idea in the book and coming back to it later. Short of hiring someone I could hand my half-solved puzzles to so I could half-solve a new one, do you have anything you can offer me here?

My reply:

This is a standard problem for creative people. One solution is enforcing a more granular workflow. Any time you contemplate “starting” something, you should set a clearly defined “stop” point. That doesn’t mean it’s stopped forever, just that you are stopping for now. You need to define one unit or increment of work with a clear end state that will allow you to move on. This increment or unit should be short. Don’t start anything else until you’ve reached the stopping point, hence the short duration. Having a bunch of projects all simultaneously in mid-flight is draining and task switching will eat time. Redefine each “flight” as a much shorter hop. Then you can leave one idea conceptually in the hanger and avoid going insane trying to simultaneously pilot all of them.

]]>http://www.markrandall.com/interesting-question/feed/0Table of Strategic Elementshttp://www.markrandall.com/table-of-strategic-elements/
http://www.markrandall.com/table-of-strategic-elements/#commentsWed, 25 Apr 2012 09:44:54 +0000http://www.markrandall.com/?p=3054By popular demand, here is the Table of Strategic Elements slide from my keynote at The Next Web conference in Amsterdam. You can subscribe to updates of this table and other posts in the sidebar. If you remix this table with new categories or layouts, I’d enjoy seeing it.

Table of Strategic Elements

]]>http://www.markrandall.com/table-of-strategic-elements/feed/4Why Market Segmentation Makes Me Crazyhttp://www.markrandall.com/why-market-segmentation-makes-me-crazy/
http://www.markrandall.com/why-market-segmentation-makes-me-crazy/#commentsSat, 14 Apr 2012 04:10:51 +0000http://www.markrandall.com/?p=3042[...]]]>Hypothetically, there are two customer segments we are considering targeting for new product development. We haven’t really started searching for the product idea yet. First we’d like to decide which segment we’d prefer. Let’s suppose one customer segment is a small, hard to reach market that doesn’t have much money and the other customer segment is a huge market with deep pockets that’s easy to reach. Now imagine the product solution we eventually come up with for the smaller market revolutionizes the world of that customer but the best product idea we can come up with for the bigger market is just a so-so, nice-to-have.

Which market should we choose to pursue? It’s not even a contest. Go for whichever market you have a revolutionary product for. Even if that market doesn’t have much money and they are hard to reach. If the product rocks their world they’ll crawl over broken glass to get it. We can build on that passionate adoption and branch out to more products and even cross over to adjacent markets. Do you know how many people on food stamps somehow find the money to support a $1,000+/yr iPhone habit? Create the right product and customers will find the money. Create the right product and you don’t have to reach the customer, they will find you. Google has still never run a product ad.

Here’s what makes me crazy, that anyone spends days and weeks researching every detail of each market sub-segment, how addressable it is, what the average spend is, how it breaks down by employee count, and so on before they have any idea what the problem or product is. I have actually been in a product presentation where the first 40 minutes and dozens of slides were focused on this kind of hyper-detailed, obsessive-compulsive, analytical navel gazing. I’m sitting there still clueless as to what the customer problem is or what the proposed product solution might be. Here is my message to my dear marketing friends, “Please stop obsessing about market segments, spend and personas before you even have a clear vision of the product idea”. It’s not a bad thing to look into market size for maybe an hour or two. Just long enough to get a rough estimate that the market is reasonably sizable and then stop. Why? No matter how favorable we think one of these markets is over the other, the difference in response between a great product for an average market versus an average product for a great market will obliterate any difference between them. All this analysis is meaningless without a clearly defined problem and a product solution hypothesis. Seriously. As long as the market is remotely sizable, all that really matters is the depth of the customer’s problem and the unique value of the solution.

Great product concepts are rare. It’s not like we get to go outside in the storm and point our wand at the exact tree where we want lightning to strike. We don’t have the luxury of carving down our possibility space and dictating that we only want our product innovation to strike in this exact segment for this exact type of customer. It doesn’t work that way. If we are fortunate enough that the fickle gods of innovation choose to bless us with a great product solution for one of these markets, then that’s the market to pursue – even if it isn’t the one we intended to target.

]]>http://www.markrandall.com/book-and-blog-links-for-entrepreneurs/feed/1Brilliant Mistakes Can Disrupt Marketshttp://www.markrandall.com/brilliant-mistakes-can-disrupt-markets/
http://www.markrandall.com/brilliant-mistakes-can-disrupt-markets/#commentsSat, 03 Mar 2012 08:04:35 +0000http://www.markrandall.com/?p=2999[...]]]>Canon made a “brilliant mistake” with their 5D mkII camera unleashing a profitable market disruption. Now they’ve released the 5D mkIII and, unfortunately, they’ve “fixed” that mistake instead of building on it. Canon could learn a thing or two from Intel. Note: This my personal opinion and unrelated to my employer’s views.

I’ve always loved Canon’s consumer DSLRs cameras, starting with the digital Rebel, arguably the first truly ‘consumer’ DSLR because it was priced under $1,000. Three and a half years ago Canon launched the 5D mkII, a new flagship camera in their mid-high end professional line. It sold for about $3,000 or nearly $4,000 with an included lens. Normally I would never have noticed this kind of camera. I was happy with the price and performance of cheaper DSLRs. But a few months after release the 5D mkII started generating a lot of buzz from video shooters and indie filmmakers. The camera included a video mode that was rather primitive but the camera’s still photography strengths, including the large 35mm imaging chip, low-light performance and high-quality interchangeable lenses made the imperfect video mode capable of some truly sensational results. You had to crawl over some pretty big flaws to get those results but there had never been anything like it anywhere near the 5D’s price point.

As great as the results could be with the 5D, the shortcomings in the video mode were serious. It could only shoot in auto mode which caused the camera to change brightness in the middle of a shot, the external audio input was nearly unusable due to high noise and the frame rate was wrong, 30fps instead of the film standard of 24 or even the video standard of 29.97. But what the camera could do was so appealing, clever users started working on the problems and came up with a variety of hacks and workarounds to solve the worst of the issues. With these tricks, indie filmmakers and adventurous hobbyists started shooting truly sensational scenes and posting them online. Canon noticed that sales were skyrocketing and thousands of requests were pouring in from users begging Canon to fix a few things with the camera to make it more suitable for video and films. A few months later Canon released a downloadable patch for the camera that allowed users to disable the auto mode, improved the audio recording and let users select 24fps. The day Canon released that update, I started shopping for my 5D.

I fell in love immediately. It was like shooting 16mm film from my days as a student. There were still some smaller annoyances with the camera but the big ones had been solved and it was awesome fun just shooting stuff for myself. The look of the footage was breathtaking. The great results had me spending more money buying lenses from Canon, adapters, filters, a viewfinder, shoulder rig, and much more. Over the course of two years I spent around six thousand dollars on my new “hobby” and more than four thousand of it went to Canon. I had previously been a low-end Canon customer buying the cheapest DSLRs and lenses. The 5D turned me into a cash cow for Canon. I wasn’t the only one. 5D cameras remained hard to get for over a year. Add-ons to make the 5D even better could be sold-out for months. At trade shows the booths showcasing tools and upgrades for DSLR video were packed. With the 5D, Canon launched an entire industry segment. It even had a new name “Cinemaphotography”.

The fascinating thing is this was all an accident. Canon has publicly stated they never intended the 5D for this purpose. The video mode wasn’t a primary feature. It was based on a request by the Associated Press. AP wanted to have their photographers start capturing little video clips to upload online to go along with the photos AP was already licensing to newspapers. Canon thought online video clips might be a nice extra feature to sell more 5Ds to professional still photographers. That’s why the audio was crappy, the frame rate was wrong and the auto mode couldn’t be turned off. It was a brilliant mistake that created a vibrant new market.

What led to this mistake? Companies typically try to maximize revenue by segmenting markets based on price and performance. Increasing performance has a linear relationship to increasing price and shrinking market size. Pricing this way is thought to maximize revenue. Except this common view can be wrong. The Canon 5D was probably part of an orderly revenue optimization plan crafted by Canon product managers. There were cameras in the Canon product line above the 5D and cameras below it. They all fell onto a roughly linear price/performance progression, at least for all the key features Canon thought users cared about, such as megapixels, still frames taken per second and low-light performance. To Canon, the 5D’s video mode was a minor feature that might attract a few more sales. This was actually true for Canon’s traditional market of professional still photographers and serious still photo hobbyists. For those customers the 5D’s features did fit right on the straight line. However, with the video mode Canon accidentally attracted customers from another market, the market of those doing (or interested in doing) film-like video production. These new users saw the 5D mkII on a very different price/performance graph. To these users the 5D was way over to the right on performance but very low on the price axis. That’s what got so many of these new customers so very excited. The 5D enabled us to do things we never expected and did it at a price low enough to actually “create” new customers where there had seemingly been none.

This is the danger of traditional market analysis. It can create the illusion of an orderly linear progression between value, price and market size. There are explosive unrealized opportunities lurking underneath these mistaken linear progressions. Smart business people can find and exploit them. I love it when one of these “accidents” happens because I like watching what the industry players do in the next generation. Do they learn from their brilliant mistake and keep forging ahead into undiscovered territory “off the line” or do they retreat back to the line for fear of not maximizing revenue?

Yesterday, Canon announced the 5D Mark III and it looks more like a retreat back to the standard price/performance line than a further leap into potentially explosive new markets. It certainly seems to be a nice camera and it’s an improvement over its predecessor in many ways but the improvements are evolutionary instead of revolutionary. I was hoping the Mark III would represent as much of an improvement for video shooters over its predecessor as the Mark II was over the Mark I. I began to suspect we might be disappointed last October when Canon announced the C300 camera, a $17,000 camera targeted directly at professional small film production. The C300 camera has many of the features I was hoping to see in the next 5D but Canon has instead decided to segment the market and charge a substantial premium for those features in new model. Even though they will sell far fewer units at this higher price, Canon’s spreadsheets must say they’ll net more total revenue. Maybe that will work, but I don’t think their market projections accurately reflect the number of new users the 5D mkII “created” by leaping much farther ahead than the typical product generation. With the next generation returning to a more normal-sized step, will those customers created by the leap begin to fade back to wherever they came from? In my next upgrade cycle I think I’ll be returning to the more affordable DSLRs under $1,000. The latest versions have already gained much of the 5D mkII’s original leap through product line trickle down. To keep me, and I suspect many thousands of others, buying at the higher 5D price point, Canon needed to follow the original leap forward with another leap instead of a normal step.

It’s unfortunate because I think Canon had an opportunity to keep the market expansion rolling. Many of the features in today’s cameras are not driven by hard costs such as labor and materials but rather by amortized IP costs which are relatively arbitrary. I suspect the DIGIC processing chip in the new 5D mkIII could have delivered more functionality than it does. For example, 60fps at 1080p resolution is something the $17,000 C300 can do. The new 5D mkIII delivers 60fps only at 720p resolution. It’s a step up over the mkII which couldn’t do 60fps at all but other Canon DSLRs under $1,000 have had 60fps at 720p for nearly two years. An even bolder feature would have been to give 4:2:2 color space and compressed RAW files to the 5D mkIII. That would have made the 5D mkIII as disruptive as the 5D mkII was. What Canon eventually decided to do isn’t necessarily wrong, it’s just the conservative approach. It’s safe but unlikely to yield exciting market shifts that create new customers and windfall profits.

In my startups we made these kind of happy mistakes quite a bit. That’s why startups can be so exciting. They generally don’t have an existing business to protect and can’t afford expensive market research reports predicting market sizes. While interesting, these pricey research reports are often wrong because they only extrapolate the past into the future. They invariably miss showing opportunities for disruption. I found out after we launched the Snappy Video Snapshot the market research reports had said the worldwide market for video capture peripherals was only 5,000 units a year. It’s a good thing we couldn’t afford those research reports because we sold over a million Snappys.The same thing happened with Trinity and with the Video Toaster. They were hugely disruptive to the existing industry because they delivered so much value at a radically lower price. To be sure, there were trade-offs made to reach breakthrough price points but we tried to make clever trade-offs users like us would be willing to live with. Some users will accept certain shortcomings or quirks in exchange for awesome capabilities in other areas. No serious market analyst would ever have predicted the non-professional Canon 5D mkII, with all it’s workarounds and shortcomings, would be used to shoot last week’s #1 national box office motion picture “Act of Valor”.

Clayton Christensen, a professor at Harvard business school, calls these users “overshot customers”. These are potential customers who don’t appear in market research because they aren’t in the market. Yet, if an acceptable mix of features are presented at the right price they’ll buy even if those features come with some severe limitations. I’m sure some at Canon think all those extra 5D customers just appeared out of nowhere. They weren’t in anyone’s survey or research report. How many other overshot customers are available to be discovered and monetized with a unique, maybe even counter-intuitive, set of features and limitations?

In the early Video Toaster days, I was at an industry trade show in New York. We were attracting huge crowds with a radically priced product that had remarkable capabilities mixed with some rather arcane limitations. We were taking a lot of orders but hadn’t shipped yet. We were already starting to freak out the big players because it looked like we might disrupt their carefully modeled market and perfectly straight price/performance lines. A senior exec from Sony offered to take a few of us out to dinner after the show. It was a fun dinner and he was a nice guy full of industry info. After dinner he hired a horse drawn carriage to take all of us around central park on the way back to the hotel. During the ride he finally got to the question I think he’d been working up to all night. He asked me, “The market for video switchers and effects devices is pretty small. What happens when everyone in the market has already bought your product and there’s no one left to sell to? Won’t you have left a lot of money on the table?” I asked him how big he thought the total market was for all these products, his and all his competitors combined. He gave me a number. I smiled a bit when I told him, “We already have more pre-orders than that”. Clearly, his best market research was wildly wrong.

Most research does “top down” market sizing which is basically all competitors sales combined. That’s what the research reports usually assemble either by polling manufacturers, resellers or component vendors. Even the forward-looking future predictions are created by asking the people currently buying today’s product how many they think they’ll buy in the future. The researchers might take that number and add the industry’s historical growth rate and then adjust a bit based on projections for the overall economy. Do you see what’s broken with that? Explosive growth happens when you find a way to ignite the people that aren’t buying today, who aren’t even shopping in the category today. That certainly describes me and the 5D mkII.

Intel created a similar situation several years ago with a Pentium processor called the Celeron 300A. This particular Celeron chip was a relatively low-end processor but a unique and accidental combination of design and fabrication technology allowed savvy users to run the chip at a much faster clock rate than specified. The hack required some tricky modifications to enable but the speed increases were stunning. The word started spreading among hobbyists and soon some motherboard manufacturers started making motherboards that had the required modifications built in. This unleashed an explosive market expansion. The Celeron 300a was the coolest thing in the tech world. Many users were running the 300Mhz chip at 450Mhz and enjoying far higher performance for the same price. In the following generations Intel locked down some of the ways that users were overclocking the chips but often left a kind of “bonus” performance gain for savvy users willing to do a little extra tweaking and run their computer outside official specs. Intel experimented with what these users were willing to pay and whether it hurt the sales of their more expensive processors. They found that most businesses didn’t want to run their machines out of spec, even if it had no downsides. There were also non-hobbyist consumers that would just buy whatever standard PC Dell or HP had on offer. But there was a growing market of “enthusiast” users that loved tweaking their machines and making them better. This was unexpected. To their credit, Intel didn’t let this “accidental learning” go to waste. They started to cater to this market selling unlocked, overclockable processors for a bit more than the standard processors. This accidentally discovered enthusiast segment is now so significant Intel makes a class of chips just for them. It’s a lesson that Canon might do well to study before the benefits of the 5D mkII “brilliant mistake” dissipate.

]]>http://www.markrandall.com/brilliant-mistakes-can-disrupt-markets/feed/2Amazon’s Missed Opportunityhttp://www.markrandall.com/amazons-missed-opportunity/
http://www.markrandall.com/amazons-missed-opportunity/#commentsTue, 28 Feb 2012 19:57:57 +0000http://www.markrandall.com/?p=2981[...]]]>Ever wonder why Amazon can’t offer a cheaper bundle including print, audio & e-book versions? Is it accountants vs. book lovers? Amazon is good at figuring out what we want before we even know it. That’s why I like the company. So it stands out when they miss an opportunity. I buy a lot of books from Amazon. I also buy audiobooks from their Audible division which I listen to while driving. Sometimes I’m torn between buying the printed version of the book, an e-book or an audiobook. They are all ideally suited for different things. When actually reading, I prefer a printed book if it’s a title I think I’ll want to keep, refer to or possibly loan out. If it’s typical Tom Clancy long-flight fodder, then I prefer it as an e-book since longevity, shelveability and loanability are trumped by portability. If I have some drive time coming up, I’ll want to go for the audiobook.

But what if I have a book like Matt Ridley’s excellent Rational Optimist sitting in my Amazon shopping cart? This is a book I’ll definitely want to shelve, refer to and loan out. If I’ve got a two hour drive tomorrow and a cross country flight the next day, I’m confronted with a lousy choice. It seems wasteful to pay full price for the same book three times over. Yet I’d be happy to pay something more to have e-book portability, print book longevity and audiobook convenience. This is a perfect opportunity for Amazon to up sell me. There are upsides for Amazon beyond more revenue. Since I have the electronic copy available immediately as a download, I don’t care if they save money by shipping the printed copy to me slow-boat, instead of second-day. Since I’ll have the printed copy for long-term reference I don’t care if they restrict the digital copy to not be transferable to other devices. This would also open opportunities to implement cross-platform features further solidifying Amazon’s position, such as the ability to pause the audiobook when I drive up to the hotel and have the e-book open up to the correct page later that night in my hotel room.

It just makes so much sense. Let’s take a real scenario. One of the many e-books now sitting in my Amazon “buy it later pile” sells for $12.99. The printed copy costs $13.02 delivered second-day (yes, I know, it makes no sense – e-books are overpriced). The audiobook download costs roughly $15, depending on which plan you have. That’s a total of $41. If Amazon offered to bundle up two versions of the same $12 book for $20, I’d buy the bundle most of the time – an 80% increase in revenue. If all three versions cost $25, I’d find it hard to resist. Amazon would be turning a $12-$15 sale into a $25 sale by bundling versions of the exact same book. This wouldn’t cannibalize sales because the customer is unlikely to have ever bought the other versions separately. That’s a win for the customer, a win for Amazon and a win for the author.

Having such a capability would also enable other revenue generating opportunities such as discounted follow-on sales. There are some books that I’ve bought in one form but after having them realize I wish I’d bought them in another form. A good example is Daniel Kahneman’s excellent Thinking, Fast and Slow. I bought this as an audiobook but stopped listening to it a little more than half way through. It’s a great book but it’s got some pretty deep, densely packed scientific concepts. After listening, I realized I should have bought the print version to fully absorb the material. Interestingly, Amazon’s Audible app on my phone knows that I listened to nearly six hours of this book quite avidly and then stopped. Yet it’s still sitting there in my playlist. If Amazon were to hit me with an offer to buy either the e-book or the printed book for a deal, they’d likely have a sale.

The frustrating thing is that I’ll bet there are folks at Amazon who know all this, agree completely and would love to start pleasing customers and earning more revenue this way. But they can’t and I can guess the reason why. The people responsible for publishing the printed book, the e-book and the audiobook are from different divisions in the publishing company. Their bonus depends on the revenue and profitability that their version of the book generates. The fact that the publisher and author stand to net more revenue overall from bundling doesn’t matter to them. Even if gross revenue is higher for each division, apportioning the revenue between divisions means that someone will gain and someone will lose profit margin. Fundamentally, the issue is that content publishers have double vision. Sometimes they want to view the content they publish as a license to consume, such as when they would like to prevent you from loaning or reselling the content you bought. Other times they want to view the content they publish as merely selling the media the content is on, such as when you would like access to the content on different devices or, back in the day, when your CD got scratched. Trying to recast their relationship with content consumers in this way might be beneficial in the short-term but I think it reduces the publisher’s long-term revenue potential.

Content publishers generally perform a worthy function as long as they aggregate valuable content, serve consumers and maximize income for authors. When they stop doing that effectively, I think it opens an opportunity for Amazon. Amazon already publishes books themselves either in e-book form or through their low-volume, on-demand printing division. The problem is that the vast majority of these indie titles aren’t available as audiobooks or as high-volume, lower-cost printed books. That’s where the cross-media up sell opportunity is waiting.